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Author Topic:   Executive Pay - Good Capitalism Bad Capitalism?
cavediver
Member (Idle past 3633 days)
Posts: 4129
From: UK
Joined: 06-16-2005


(1)
Message 4 of 135 (647394)
01-09-2012 3:16 PM
Reply to: Message 1 by Straggler
01-08-2012 6:50 PM


Are the salaries of the economic elite out of control and in need of regulation?
From my perspective:
Exec salaries are high because they need to compensate the execs for not being free to set up their own businesses which, if successful, could make them much wealtheir than any salary. A typical exec-candidate will be in a prime position to set up his own business: market knowledge, business experience, and a wealth of contacts. In fact, he will almost certainly have a bunch of peers who have done precisely that. The companies want execs with these skills and knowedge bases and need to make the exec position tempting compared to the entrepreneurial route.
I think the bull-markets of the late 90s and the dot-com boom were partially repsonsible for taking the above to a new level. There was stupid money around for those setting up tech companies, and the money you could making trading was equally staggering; the execs were looking relatively impoverished. I remember back then reading complaints concerning exec pay (~500,000) and thinking it odd that no-one knew what the real big salaries/bonuses were like (as in the traders making multiple million bonuses) So the exec remuneration started playing catch-up through the 2000s.

This message is a reply to:
 Message 1 by Straggler, posted 01-08-2012 6:50 PM Straggler has replied

Replies to this message:
 Message 8 by Straggler, posted 01-13-2012 5:08 PM cavediver has replied

  
cavediver
Member (Idle past 3633 days)
Posts: 4129
From: UK
Joined: 06-16-2005


Message 10 of 135 (648191)
01-13-2012 6:15 PM
Reply to: Message 8 by Straggler
01-13-2012 5:08 PM


But it strikes me that the risk factor of taking a position in a FTSE 100 company (or equivalent) is far less than investing one's existing wealth in starting a new company.
Very true. I have no real objection to the large rewards given for running a successful company, and I probably disagree with you that it would be better for good execs to be starting their own businesses instead of running existing corporations: I have seen large companies fail under bad leadership and the fallout is unpleasant to say the least.
But I strongly object to the golden parachutes and downside remuneration that seems to have become endemic. It is akin to the problems with trader bonuses encouraging excessive risk taking owing to a lack of downside consequences. This was something I tried to address long ago whilst advising banks in my role as a risk management consultant.

This message is a reply to:
 Message 8 by Straggler, posted 01-13-2012 5:08 PM Straggler has not replied

Replies to this message:
 Message 11 by crashfrog, posted 01-13-2012 7:36 PM cavediver has replied

  
cavediver
Member (Idle past 3633 days)
Posts: 4129
From: UK
Joined: 06-16-2005


Message 12 of 135 (648382)
01-15-2012 4:31 AM
Reply to: Message 11 by crashfrog
01-13-2012 7:36 PM


How'd that turd in the punchbowl go over?
In the banks' risk departments, great.
But until risk departments are regarded as "profit-saving" centres and not just cost-centres merely there for the sake of compliance with the FSA/SEC, then don't expect too much...

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 Message 11 by crashfrog, posted 01-13-2012 7:36 PM crashfrog has not replied

Replies to this message:
 Message 13 by hannahdelavel123, posted 01-08-2015 7:42 AM cavediver has not replied

  
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